As veterans already know, VA mortgage interest rates are the lowest in history. Veterans know this because they are bombarded by internet ads, direct mail, and their own current mortgage company calling them daily about refinancing.
Here are some simple guidelines. A veteran is eligible for a “streamline” interest rate reduction refinance loan (IRRRL), if their present loan is already a VA loan and there has been 210 days from their first payment on the current loan.
The veteran also must be able to make up all closing costs within 36 months or they cannot use the IRRRL program. The calculation for recouping closing costs is easily done by taking the cost of the loan and dividing it by the amount saved per month. If the recoup time is 36 months or less, the veteran is eligible. Lenders cannot fudge this number.
Remember, a VA IRRRL never requires an appraisal and lenders do not have to income qualify the borrower for the loan, so no paystubs or tax returns are needed. Although streamlines are available to shorten a term such as from a 30 to a 15 year mortgage, veterans must still recoup their closing costs within 36 months or they cannot do the IRRL program. Shortening the term is every difficult to do as the 36 month recoup formula still applies.
Most importantly, veterans need to shop their IRRRL around and never assume their current lender, internet lender, or bank is offering them the best deal. Lenders are notorious for charging buy down fees for low rates or offering a higher rate than the veteran can qualify for with a different lender.
Shop your mortgage loan when you’re considering a refinance to compare fees and shop local by including a local mortgage company. Indigo Mortgage is your trusted local VA mortgage company, handling many VA loans for New Mexico veterans.